Reasonable cause under section 273B defeated penalty for non-compliance with income-tax notices due to accepted medical incapacity.

Penalty under section 272A(1)(d) for non-compliance with notices under section 142(1) was held unsustainable where the assessee established reasonable cause under section 273B. Although the default in complying with the statutory notices was not disputed, the assessee's medical incapacity was accepted as the explanation for the failure, and the non-compliance was treated as not deliberate. On that basis, the penalty provision could not be applied and the penalty was deleted in favour of the assessee.

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Issues: Whether the penalty imposed under section 272A(1)(d) of the Income-tax Act, 1961 for non-compliance with notices under section 142(1) could be sustained despite the assessee's explanation of medical incapacity and invocation of section 273B.

Analysis: The non-compliance with the statutory notices was not disputed. The statutory bar on penalty under section 273B applies where the assessee proves a reasonable cause for the failure. On the facts recorded, the assessee's medical condition was accepted as the explanation for the default, and the case was treated as one where the failure to comply was not deliberate. In such circumstances, the penalty provision could not be applied.

Conclusion: The penalty under section 272A(1)(d) was not sustainable and was deleted in favour of the assessee.

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